Aurizon Holdings Ltd. · ASX:AZJ
Aurizon — HY2024 Earnings Presentation
50 slides from Aurizon's earnings presentation, Feb 12, 2024
Slide 1: HY2024 Results
| * — Aurizon ¥2024 Results 12 February 2024 £2? PURIZON.
Slide 2: No reliance on this document / Statements about the future
NO RELIANCE ON THIS DOCUMENT STATEMENTS ABOUT THE FUTURE This document was prepared by Aurizon Holdings Limited (ACN 146 335 622) (referred to as “Aurizon” which includes its related This document contains “forward-looking statements”. The words “expect”, “anticipate”, “likely”, “intend”, “should”,
Slide 3: Safety and results snapshot
› › › › - - - › 1. Unaudited results and subject to review including the incorporation of Bulk Central 2. Total Recordable Injury Frequency Rate is the number of instances (per million hours worked) of Lost Time Injuries, medical treatment injuries and restricted work injuries sustained by employees
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Slide 5: Key messages
IHFY2024 RESULTS INTRODUCTION & OVERVIEW > aurizon. Key messages Uplift in earnings and cashflow driven by recovery in volumes, contribution of new contracts and an increase in regulatory Network revenue Ww EBITDA up 26% with growth from Dividend: 75% of NPAT for Network, Coal and Bulk IHFY2024 Cont
Slide 6: 1HFY2024 results highlights
EBITDA NPAT ROIC2 FREE CASH FLOW3 (EXCLUDES GROWTH CAPEX) $847m $237m 9.0% $256m up 26% up 40% up 0.5ppts up 169% COAL VOLUMES BULK VOLUMES NETWORK: INTERIM DIVIDEND5 FINAL WACC4 APPROVED 94.0m 34.1m 8.51% 9.7cps up 4% up 1% up from 6.30% up 39% 1. All amounts are underlying and on a continuing basi
Slide 7: Note: Due to rounding, the sum of components may not equal the corresponding total
› › › › › › › 7 Note: Due to rounding, the sum of components may not equal the corresponding total
Slide 8: Bulk
IHFY2024 RESULTS INTRODUCTION & OVERVIEW Bulk > aurizon. Higher earnings driven by volume recovery and new contracts, offset by customer production issues and lower grain volumes. New Bulk Central contracts secured > Increased iron ore volumes in Western Australia, partly offset by lower grain volum
Slide 9: Note: Due to rounding, the sum of components may not equal the corresponding total
› › › › › 9 Note: Due to rounding, the sum of components may not equal the corresponding total
Slide 10: Containerised freight network
› › Darwin › › Townsville › Brisbane Perth Sydney Adelaide National Interstate Melbourne Central Corridor1 Note: Intra-Queensland hook-and-pull services not shown 10 1. Central Corridor containerised freight services reported in Bulk business unit
Slide 11: MO gs
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Slide 12: Group financial results
$m 1HFY2024 1HFY2023 Variance (%) Variance ($) › Revenue growth driven by higher Network regulatory revenue (increased WACC, asset base and volumes), higher Coal Revenue 1,972 1,694 16% 278 volumes and yield, along with Bulk and Containerised Freight Operating Costs (Total) (1,125) (1,021) (10%) (10
Slide 13: Coal
EBITDA: Major drivers ($M) Revenue 1 Operating costs 2 net of fuel and access (revenue and cost) 5 $650m ($367m) 23 283 50 +11% (3%) 230 21 EBITDA Tonnes hauled $283m 94.0m 1HFY2023 Volume Net Revenue Other Operating Costs 1HFY2024 Yield +23% +4% › EBITDA increased due to an uplift in revenue result
Slide 14: Bulk
EBITDA: Major drivers ($M) Total Revenue Operating Costs net of fuel and access (revenue and cost) $559m ($447m) 36 23 1 112 100 +7% (6%) EBITDA Rail Tonnes Hauled $112m 34.1m 1HFY2023 Revenue Operating Costs Other 1HFY2024 +12% +1% › EBITDA increased by $12m to $112m due to new contract volumes off
Slide 15: Network
EBITDA: Major drivers ($M) Total Revenue Operating Costs net of fuel and energy/electric charges (revenue and cost) 1 $758m ($272m) 18 486 140 +23% (8%) 363 EBITDA Tonnes $486m 106.5m 1HFY2023 Access Revenue Other Revenue Operating Costs 1HFY2024 +34% +3% › Higher access revenue driven by an increas
Slide 16: 1HFY2024 capital expenditure
1HFY2024 CAPITAL EXPENDITURE1 ($M) FY2024 Growth Capex Growth Capital Expenditure1 1HFY2024 Expected 98% Bulk & Containerised Freight Non-Growth Rolling Stock Capex Standard Gauge Locomotives & Wagons (and $61m ~$185m Containers) 64% Network Port and Terminal Equipment $15m ~$35m $400m Terminal Land
Slide 17: Funding activity and key debt metrics
FUNDING ACTIVITY KEY DEBT METRICS1 1HFY2024 FY2023 Aurizon Network Weighted average maturity1 4.3 years 3.6 years › A$500m Syndicated Institutional Term Facility across 5 and 6-year tenors ($260m, Group interest cost on drawn debt 6.1% 4.1% $240m respectively) › A$150m bilateral bank debt across 5,
Slide 18: Photo: Aurizon Kwinana maintenance depot (Western Australia)
Photo: Aurizon Kwinana maintenance depot (Western Australia)
Slide 19: Resilient Coal and Network, Bulk growth, containerised freight
Drive Bulk growth Establish nationally significant containerised Resilient Coal and Network businesses across national footprint freight supply chain Coal plus Network EBITDA ($m) Bulk EBITDA ($m) TEUs3 (‘000) 97 $1,415 $1,382 $1,331 $1,342 $1,268 $214 $140 $135 $110 75 $702 $682 $769 45 $666 $666 $
Slide 20: FY2024 guidance
FY2024: › Group underlying EBITDA expected to be in the range of $1,590m - $1,680m › Sustaining capex expected to be $600m - $660m (including ~$40m of transformational project capital) › Growth capex expected to be $250m - $300m Key assumptions › Network: revenue and EBITDA expected to be higher tha
Slide 21: Photo: Aurizon Kwinana maintenance depot (Western Australia)
Photo: Aurizon Kwinana maintenance depot (Western Australia)
Slide 22: intainer and Emma Bradtke, ApBrentice Mechanical Fitter, Stuart (Quéepsiend)
{ intainer and Emma Bradtke, ApBrentice Mechanical Fitter, Stuart (Quéepsiend)
Slide 23: Network, Coal, Bulk
Network ▪ Network refers to the business which operates the 2,670km Central Queensland Coal Network (CQCN), connecting around 40 mines to five export terminals. The CQCN includes four major coal systems (Moura, Blackwater, Goonyella and Newlands) and a connecting link, the Goonyella to Abbot Point E
Slide 24: Strategic aspirations to FY2030
Resilient Coal and Drive Bulk growth Establish nationally significant Network businesses across national footprint containerised freight supply chain Our aspiration to achieve Our aspiration to achieve Highly disciplined businesses, supporting Aurizon's 25-30% >500k TEU diversified portfolio share o
Slide 25: ESG and decarbonisation
› › › › › › › 1. Deloitte Access Economics Value of Rail 2020 2. NSW Government: Consultation Paper: Clean Air for NSW, 2016 3. ESG-related aspirations and targets described in this presentation are discussed in detail in Aurizon’s Sustainability Reports and Climate Strategy and Action Plan, availab
Slide 26: Zero emission platforms
Zero Emission platforms CORRIDOR ENERGY REQUIREMENTS VS ALTERNATIVE FUEL SOLUTIONS2 60 4,000 Battery Electric Locomotive (BEL) 3,500 50 BEL + HET Targeting Retrofit 29.7 MWh 3,000 Platform provided by Locomotive OEMs, with pantograph charging system and lithium-ion 40 Energy Capacity (MWh) battery t
Slide 27: Capital allocation hierarchy
Capital Allocation Hierarchy Capital Management › Opportunities if there is surplus capital $1.3b Determine Available Capital Non-Growth Capital Dividends › Ongoing operating cash flows › Sustaining and transformation › Within 70-100% payout ratio or → projects › Additional funding capacity availabl
Slide 28: Steel and thermal coal market trends
GLOBAL CRUDE STEEL PRODUCTION | BLAST FURNACE-BASIC OXYGEN FURNACE ASIA: THERMAL (STEAM) COAL IMPORT VOLUME | SHARE OF GLOBAL THERMAL SHARE1 (STEAM) COAL IMPORT MARKET2 2.0bt 1,000mt 83% 90% +3% 800mt 80% 1.5bt 70% 600mt 1.0bt 60% 400mt 74% 73% 72% 50% 0.5bt 69% 65% 200mt 34% 40% 55% 58% 62% 0.0bt 0
Slide 29: Mining capex and grain market trends
AUSTRALIA: METAL ORE MINING CAPEX | BASE METALS EXPLORATION EXPENDITURE1 GRAIN EXPORT VOLUME: 1HFY20242 By quarter By State (million tonnes), change compared to 1HFY2023 9.5 flat $6b $30m $5b $25m 3.2 3.0 1.8 1.2 $4b $20m WA SA NSW Vic. Qld. $3b $15m AUSTRALIA: CROP PRODUCTION VOLUME3 By State, mark
Slide 30: Volumes by quarter
Quarter Ending Financial Year to date Mar-23 Jun-23 Sep-23 Dec-23 1HFY2024 1HFY2023 Variance Coal CQCN mt 30.1 36.6 32.7 33.6 66.3 66.9 (1%) NSW & SEQ mt 13.4 14.4 13.5 14.2 27.7 23.6 17% Coal Total Volumes mt 43.4 51.0 46.2 47.8 94.0 90.5 4% CQCN NTKs bn 7.4 9.1 8.4 8.4 16.8 16.5 2% NSW & SEQ NTKs
Slide 31: Enterprise agreements
# Staff Headline Increases Term Enterprise Agreement Covered Expiry Date Status (years) Year 1 Year 2 Year 3 Year 4 (approx.) SA/NT Bulk Rail Operations 170 4 16 Dec 2023 3.0% 3.0% 3.0% 3.0% Bargaining QLD Bulk Traincrew & Transport Operations 5.3% 370 1 24 Jan 2024 Bargaining QLD Bulk Maintenance 5
Slide 32: EBITDA by business unit
1HFY2024 1HFY2023 Variance 2HFY2023 Coal 283 230 23% 225 Bulk 112 100 12% 114 Network 486 363 34% 450 Other (34) (20) (70%) (34) EBITDA 847 673 26% 755 32 1. Continuing operations
Slide 33: EBITDA bridge
12 14 847 53 123 673 1HFY2023 Network Coal Bulk Other 1HFY2024 1. Continuing operations 33 Note: Due to rounding, the sum of components may not equal the corresponding total
Slide 34: Balance sheet
31 December 2023 30 June 2023 31 December 2022 Assets classified as held for sale - - 962 Other current assets 1,221 1,193 923 Total current assets 1,221 1,193 1,885 Property, plant and equipment (PP&E) 10,072 9,945 9,910 Other non-current assets 419 541 411 Total non-current assets 10,491 10,486 10
Slide 35: Debt maturity profile
1,353 AURIZON NETWORK ($m) 370 205 711 550 425 50 372 778 310 310 50 264 205 115 500 142 240 80 270 50 75 20 145 184 122 40 82 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36 AURIZON OPERATIONS ($m) 900 400 475 465 295 500 196 153 103 170 50 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 F
Slide 36: Capital expenditure by segment
Bulk & Network Coal Corporate Total Containerised Freight Non-Growth 197 52 49 10 308 Growth - 2 90 - 92 Total 197 54 139 10 400 36 1. Includes capitalised interest and capital accruals. Excludes any M&A activity and any Network externally funded projects
Slide 37: Debt reconciliation
$m Commentary Total debt including working capital facility 5,265 Borrowings on a cash basis Reconciliation to Financial Statements Add/(less): Borrowings acquired in connection with the Tarcoola-to-Darwin Concession Deed for face value of $50m Corporation Loan 6 issued at below market interest rate
Slide 38: Coal financials
$m 1HFY2024 1HFY2023 Variance 2HFY2023 Above rail 642 582 10% 593 Track access 237 175 35% 175 Other 8 4 100% 2 Total Revenue 887 761 17% 770 Access costs (243) (185) (31%) (215) Operating costs (361) (346) (4%) (330) EBITDA 283 230 23% 225 Depreciation & Amortisation (104) (100) (4%) (104) EBIT 179
Slide 39: Coal volumes by system
1HFY2024 1HFY2023 Variance 2HFY2023 Central Queensland Coal Network (CQCN) Newlands 6.7 8.0 (16%) 8.1 Goonyella 28.0 29.7 (6%) 30.4 Blackwater 24.0 22.5 7% 21.9 Moura 7.7 6.7 15% 6.3 Total CQCN 66.3 66.9 (1%) 66.7 New South Wales and South East Queensland (NSW & SEQ) West Moreton 1.7 1.0 70% 1.1 Hun
Slide 40: Coal contract volume expiry
AURIZON COAL CONTRACT VOLUME EXPIRY BY YEAR1 COAL CONTRACT PORTFOLIO EXPIRY1 AS AT 31 DECEMBER 2023 AS AT 31 DECEMBER 2023 75 4% 23% 0-3 years 3-7 years 60 7+ years Million tonnes per annum (Mtpa) 73% 45 COAL CONTRACTED VOLUMES (MT) 30 230 230 230 62 57 60 15 169 173 170 0 FY24 FY25 FY26 FY27 FY28 F
Slide 41: Bulk financials
$m 1HFY2024 1HFY2023 Variance 2HFY2023 Revenue 559 521 7% 542 Access costs (61) (52) (17%) (52) Operating costs (386) (369) (5%) (376) EBITDA 112 100 12% 114 Depreciation & Amortisation (60) (53) (13%) (55) EBIT 52 47 11% 59 Above Rail Tonnes (m) 34.1 33.6 1% 34.6 41 Note: Due to rounding, the sum o
Slide 42: Network financials
$m 1HFY2024 1HFY2023 Variance 2HFY2023 Track Access 694 583 19% 672 Services & Other 64 31 106% 51 Revenue 758 614 23% 723 Energy & Fuel (84) (110) 24% (105) Other Operating Costs (188) (141) (33%) (168) EBITDA 486 363 34% 450 Depreciation & Amortisation (174) (173) (1%) (178) EBIT 312 190 64% 272 T
Slide 43: Network volumes by system
1HFY2024 1HFY2023 Variance 2HFY2023 Newlands 9.7 9.8 (1%) 10.9 Goonyella 51.9 53.1 (2%) 53.9 Blackwater 28.4 26.0 9% 26.4 Moura 8.2 6.5 26% 6.3 GAPE 8.3 7.4 12% 7.2 Total (mt) 106.5 102.9 3% 104.7 43 Note: Due to rounding, the sum of components may not equal the corresponding total
Slide 44: Network access revenue movement
$m Increase in non-GAPE MAR (excluding Revenue Cap) from 1HFY2023 to 1HFY2024 45 Revenue Cap movements 1HFY2023 to 1HFY2024 15 Volume under-recovery for 1HFY2023 (reversal of impact) 52 Volume over-recovery for 1HFY2024 27 GAPE revenue 4 Electric Traction revenue (29) Other Access revenue (3) Moveme
Slide 45: Indicative Network adjusted maximum allowable revenue
INDICATIVE NETWORK ADJUSTED MAXIMUM ALLOWABLE REVENUE (MAR)1 FY2023 – FY2025 ($M) +$70m 1,158 57 +$125m Adjustments 1,088 10 29 32 99 Adjustments Under- collection 29 963 4 1 21 941 FY23 Cap Rec Rev Cap FY21 Rev Cap FY22 Non-Adjustment FY242 FY22 Capital Rec Rev Cap FY22 Rev Cap FY23 Non-Adjustment
Slide 46: Revenue adjustment amounts
AT2-4 AT5 Total Total › Revenue adjustment amounts (RAA) are the difference by system Financial Year (inc-GAPE) (ex-GAPE) between Aurizon’s Total Actual AT2-5 Revenue and Allowable AT2-5 $m $m $m $m Revenue › The RAA amounts are collected or repaid through a tariff adjustment 2023 1 9.9 23.1 33.1 32
Slide 47: Network access revenue
1HFY2024 FY2023 FY2022 $m Actual Actual Actual Access Revenue (AT1 to AT5) (ex. GAPE) 556 942 891 Approved Adjustments to MAR Revenue Cap (ex. GAPE and inclusive of capitalised interest) 15 (1) 5 Regulated Access Revenue (ex. GAPE) 571 941 896 Total non-regulated Access Revenue (ex. GAPE) 43 161 77
Slide 48: Approved allowable revenue
APPROVED ALLOWABLE REVENUE ($m)1 FY20242 FY2025 FY2026 FY2027 Building block component Approved Preliminary Reset Values Approved Final Reset Values Approved Final Reset Values Approved Final Reset Values Allowable Revenue Allowable Revenue Allowable Revenue Allowable Revenue Return on capital 493.7
Slide 49: UT5 WACC timeline
UT5 WACC TIMELINE The difference between the Preliminary (8.18%) and Final Reset WACC (8.51%) for FY2024 tariffs will be incorporated into FY2026 Reference Tariffs as a revenue adjustment 14 March 2022 30 June 2027 1 July 2023 1 July 2024 Report Date Terminating Date WACC Preliminary Reset WACC Fina
Slide 50: Investor relations contacts
a Za ¥ | James Coe He id of Investor Relations & Market Intelligence a | f +617 3019 7526 James.Coe@aurizon.com.au Jason Di Pietro s Manager Investor Relations +61 7 3019 1135 Jason. DiPietro@aurizon.com.au 5 ={nsx: AZJ